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Technical Analysis Fallacy

  • #1,661
  • Mar 9, 2008 6:13pm Mar 9, 2008 6:13pm
Quoting luSan
Regarding my SMA(68). The thing also works...
Are you using it on the 5m chart or the 15m chart?

I use the 15m only to determine the "tearing" of the PA from the 48sma, but use the 5m to actually do my dancing and entry/exits.

When I'm ready to post my quantified results, I'll also post some sample charts, so it's easier to visualize what I'm actually doing with the dancing.
  • #1,662
  • Mar 9, 2008 6:15pm Mar 9, 2008 6:15pm
Quoting leighsww
luSan and NorthPro had some GREAT posts that clearly exemplifies that they have reached the point of being even better traders than those "rogue" professional ones in the article, lol.

But that's the thing ... those rogue traders didn't get to read this thread, lol, nor have benefited from the insights, skills, lessons and teachings of fti

Seriously though, I will say this to add to what luSan and NorthPro mentioned about their success rate so far with their trading ... with the article/story you linked to, with all 3 traders named there, we don't have many facts to how they traded those trades. We don't know what their strategy was with how they enter or exit their trades, we don't know what timeframe chart they were trading on, we don't know if they were trading with or against the longer-term trend, we don't know if they tried to re-average their positions and just failed to exit when reaching the break even point or better, we don't know if they had many opportunities to exit at profit (if they did re-average their Basis) but just failed to do so because of "greed" or "hoping" to make more profit, etc., etc.

Like with the one called Frank, he relied on hearsay info from his friend to make a decision on his trade. I wouldn't base my trades on something like that. I don't even trade with fundamentals (even though fti does to some extent) because to me, fundamentals are also not always reliable (look what happened with Friday's NFP news). Dancing with the PA is what I focus and make my decisions on.

Anyway, there are so many possibilities as to why those 3 pro traders failed and why someone else might have been successful had they traded in their place. I bet luSan, NorthPro and all of us here who are conducting re-averaging successfully, would have rescued and exited those trades well before they even got into that kind of trouble (and we wouldn't have over-extended our initial position in the first place without being able to conduct enough rescues to get ourselves out safely).

Just because those 3 pro traders failed their trades and lost a lot of money hoping that the market would come back to their Basis, doesn't mean much unless one trades in the same manner and with the same mindset in which those traders traded. To me, when professional traders lose money, it's because they deviated from their system and broke all their own rules (if they had any rules), or they were too rigid in their mindset, or greed and/or hope took them over. It's clear that they did not re-average their Basis appropriately nor safely exit when the opportunity presented itself. That is the only reason that makes sense as to why they got themselves in the bind that they did.

If they had learned and had achieved the proper mindset and MM with the lessons we have been provided here by fti, then their outcome may have been a very different story.

Also, for me, one should never have to be in rescue mode to the point where it becomes an overnight position.

My MO is that of "daylight" trading and that's it. There is no holding longer-term positions for me if I can help it. One can call that rigid, but I don't care :

Again the goal in finding my system/strategy was to conduct a safe method with using re-averaging, especially if one cannot trade with the aggressiveness and ferocity in which fti does, lol. Only those not following all the lessons learned here will find destruction with trading my system/strategy or any system/strategy for that matter.

BTW, have you read through this entire thread? I would recommend that you do so, if you haven't. Sorry, but I just have this feeling that you haven't, cuz I don't think you would have felt the need to warn us about those rogue traders if you had, lol (or maybe you still would have and that's fine, as every post has merit to enlighten and teach us things ). Anyway, there's some very powerful stuff embedded in this thread that have made a huge difference in our lives/trading!
Leighsww,

I have read this thread, and I use position averaging in my trading, although I view the battleground or the concept of rescuing differently than what has been discussed. But I would warn anyone of taking the attitude that the market cannot throw you a curve ball that you can not pound out of the park.

Of the three stories, the first one Karl, troubles me most. He was a veteran trader the other two were relativity new. Yes we are lacking many of the facts as to what actually happened, but I’d guess that Karl traded day in day out making money and comfortable in his technique and strategy until one day he found himself on the wrong side of the market and it continued to run against him. At first it seemed manageable, then a heavy loss, and suddenly the realization that the loss was outside his limits and then devastating job ending, life changing losses. At this time he was paralyzed in thought, the only light visible at the end of the tunnel and the only way out of his predicament was to hold as the market would eventually right itself.

This is the problem that I see with the approach that one will never take a loss unless your cash reserves are limitless.

Hence Karl, he was a successful trader, then one day the market threw him that curve ball and he was unable to recover. Given enough time the market will eventually throw us that curve ball, where the market will not quickly give us a correction to load up and make it back to Breakeven. To what level do we keep adding exponentially? At what percentage of our account to we put at risk 20, 30, 40% What happens when we hit that level and the market keeps dropping, but we know that it will turn around on the next level so we add one more round………………………………

I’m not trying to take away from this thread, there are many great ideas shared here. it just seems to me that the mindset that seems to be developing is one that has no fear of the markets, and in my humble opinion it is a dangerous one.

Regards,
  • #1,663
  • Mar 9, 2008 6:30pm Mar 9, 2008 6:30pm
Quoting leighsww
Hey, nice to see you again, shreem!

You've got a ways to go yet till you reach the end of reading this entire thread, but it'll all be worth it

Hello Leighsww, thank for the welcome. Yes, I know its a lot of reading but no problem for me.

I do really enjoy reading fti posts. Also, as he have taken a lof time to type his posts to enlighten us about how he see the markets, the minimum I can do to show him my respect and gratitude is to take all the necessary time to read, learn, dissect and digest what he is teaching and showing us.

I know well in advance that I will only get a better trader and human being by taking the time to go through it.

Very happy when I cross path with people with true and sincere heart to help others fellows develop.

So, happy to become part of this thread family

Sincerely

Shreem
  • #1,664
  • Mar 9, 2008 7:01pm Mar 9, 2008 7:01pm
Quoting leighsww
Are you using it on the 5m chart or the 15m chart?

I use the 15m only to determine the "tearing" of the PA from the 48sma, but use the 5m to actually do my dancing and entry/exits.

When I'm ready to post my quantified results, I'll also post some sample charts, so it's easier to visualize what I'm actually doing with the dancing.
I do as you do: I use the SMA(48!) in the 15M as you recomended. I dance with the 5M.

Warning and reminder: SMA(48) is NOT an indicator but ONLY reminder about the very short term trend. No signal is taking from it. Leighsww uses it as a "tearing away." I use it as a PA center of gravity guiding my short/long decisions.
Empty as water and soft as a facing wind mountain
  • #1,665
  • Edited 8:44pm Mar 9, 2008 7:19pm | Edited 8:44pm
Quoting auxesis
I’m not trying to take away from this thread, there are many great ideas shared here. it just seems to me that the mindset that seems to be developing is one that has no fear of the markets, and in my humble opinion it is a dangerous one.
I understand your point and it's a valid and caring one .

fti had hesitated in sharing his complete training, because of basically the same reason as you ... he was worried that not knowing the level of each trader and not being able to hand-hold each individually, some may use the knowledge to their demise.

I think discussing all these type factors are essential, so as to remind all of us that nothing in life or the market is certain, especially when our egos may get in the way, lol.

This is why I am trying to devise a system/strategy that can hopefully be safer for all of us, yet yield substantial profits.

But, I don't want to disclose it until I have the quantified results, otherwise you and others may still find it hard to believe, lol.

Also, I don't want to put something out there that's incomplete and not fully tested, thus needing to have a fix-after-fix while it may cause some to not use it properly. I want to get it to where it's got enough of a track record to call it viable.

I have to warn, however, there will be more transitions of mindset needed, haha :, since some of what my system is about will deviate from previous conservative MM concepts (sorta like how we've deviated from the concepts of stop losses and adding to losing positions, lol). BUT, until you see the spreadsheet and see how I dance, only then can one truly grasp just how powerful this could be.

I will say this ... I showed my system/strategy & spreadsheet to my husband (a chemist) and my dad (an Electrical Engineer) who are both savvy with mathematics and they were ecstatic and as excited as I was with how this all works.

So now, I need to do the quantified testing of at least 20 trades before I can call this system successful. And if I yell out "YUREEKA!" in a future post, then you'll know that it was and all will be disclosed!

Geeheebis! I wasn't even going to post back to this thread until I was ready with my results, but that dang BabeFX just had to make me feel guilty about abandoning this thread, thus I had to scold her/him (I'm thinking you're a "her" with the prefix "Babe" in your name, but clear me up on that if I'm wrong, lol) and in the process share that I had something in the works so as to let you guys know that I would be having something meaningful to contribute again soon, lol.

Where's my whip? BabeFX ... you best guard your backside!! :

*Edit - ACK, okay, so I spelled "EUREKA" wrong, but if I'm successful with my system, then we're all on our way to become [insert whatever word you want here] and then who the heck cares, lol!
  • #1,666
  • Mar 10, 2008 4:11am Mar 10, 2008 4:11am
leighsww,

Be gentle with your whip.

On a more serious note.

Casual observers to this thread could easily interpret the rescue as a dangerous & possibly futile operation because they are perhaps assuming that we use our normal contract size to enter the market.

In fact we only use a small percentage of the contract that we previously used in our "pre-fti" trading days.

In a carefully planned attack or rescue I would very rarely utilize my former full contract size & once the attack or rescue starts to go significantly into profit I start to average out.


Regards,


BabeFX.



I am wrong until the market proves me right.
  • #1,667
  • Mar 10, 2008 4:38am Mar 10, 2008 4:38am
You could argue that if we are carrying out a rescue, then we entered into the market at the wrong level to start with.

The question I put to doubters is this - what is the right level to enter the market.

$ cost averaging enables us to enter the market at more or less any level assuming we are trading with the trend that is, and with a robust MM strategy pick up the fallen fruits.

Regards,

BabeFX


I am wrong until the market proves me right.
  • #1,668
  • Edited 9:32am Mar 10, 2008 9:20am | Edited 9:32am
Hi ALL,
I am so sorry for not being around, as I am still in the midst of an important task. So in effects I am undisposed for the mom. But as this link was posted in the thread, and intresting enough that, I have such a need to make a respond of the article that, this is required.

Since there are 3 cases sighted , I will respond on a case to case basis, as my leisure permits.

Quoting auxesis
Not trying to post any competitors site but this post is a lesson everyone should learn, hopefully from others mistakes and not your own..... the difference between wisdom and knowledge.


I am not trying to start an argument but trading with the assumption that the market will always return to an average, can be costly.........especially if the market runs away from you, by the time the thrust finishes the average might be well past the available margin if we are overleveraged.

If we enter wrong and the market goes against us, and we can see a context or pattern to the market that allows us to average in then by all means try an salvage the position, but there must come a time when we have to cut and run and live to fight another day.

or else we can end up like this............

http://www.medianline.com/

fwiw,

"individual traders possess the same weaknesses and character flaws that allowed these traders to lose this much money speculating for Institutions. How do I know it’s a much more common happening than the press and officials would have you believe?"

As a matter of fact what was quoted is correct. In a world where market risk is managed daily, this is likely to happen every time any trader attempts market risk. I note that the author may be a peer in teir 1 as his email suggest,(swiss banks corp is teir 1) but there seems that there is a stong possibility that this is just "story" due to many "clues" within the article.

With this recent huge loss in the Wheat markets by a rather small player, it should be obvious to all of us that this is a much more common occurrence than we think. Yet many analysts have weighed in with their opinion that this type of event is unusual, that this is an isolated case. While it’s true the size of the loss associated with this event makes it a bit unusual, what this trader did was hardly unusual and you might be surprised when I say that many individual traders possess the same weaknesses and character flaws that allowed these traders to lose this much money speculating for Institutions. How do I know it’s a much more common happening than the press and officials would have you believe? Read on and I’ll tell you about three such events that happened while I was managing professional traders at US Institutions [Note there were many more such incidents I witnessed over the years at the Institutions I worked at and that the names and circumstances given here were changed enough in the telling that no one and no Institution could be recognized, nor could their reputation be damaged].

Karl was a well known currency trader. I had made many cash currency trades with him over the phone before we were both working at the same US bank. I’ll say one thing about Karl: He could make money faster than any trader I have ever known, before or since. And he loved to trade. In the early 1980’s, before cell phones were invented, Karl had a two-line phone installed in each of his bathrooms at home, so he wouldn’t miss a call from a trader around the world if he was in the bathroom making a trade on the first phone line! Karl was a trading junkie, pure and simple. He lived to trade.

I’ll say one thing about Karl: He could make money faster than any trader I have ever known, before or since. And he loved to trade. In the early 1980’s, before cell phones were invented, Karl had a two-line phone installed in each of his bathrooms at home, so he wouldn’t miss a call from a trader around the world if he was in the bathroom making a trade on the first phone line! Karl was a trading junkie, pure and simple. He lived to trade."

Karl as was suggested seems to be a pro in detail of the analysis of his behaviour and commitment to his job as was described in the article. Baring his limits ethicate.

"Our manager was away from the trading room one Monday morning, visiting the Head Office for the entire week. There was no need to name anyone to take his place while he was gone: Though our manager was the nicest guy in the world, he gave us all strict intraday stop-loss limits and overnight position and stop-loss limits and made it clear that if they were ever violated, we would be fired with no questions asked. He had a black binder at the end of trading desk and you were expected to write down each day’s profit or loss and your overnight position before you left for the day. And of course, then you had to sign your name next to what you had written."

the black binder system totally put the trading room risk reporting protocol to shame. It cannot happen.
The reason is that the risk and book PL reporting resposibility is the job of the settlements dept with fully reconcilation respondsibility with the compliance managers. Therefore it cannot be acceptable to me that such burden was placed in the confines of a report book on the TMs table in his absence. Seems that the manager must have no risk protocol.

"The markets that day were completely crazy. Several hours into the trading day, one of the marketers motioned for me to come over to speak with her. I assumed she had a client on the line that needed advice or wanted to speak to me personally. Instead, with a hushed voice she told me to go back to my desk, wait a few minutes, and then get up and walk into our manager’s office, close the door behind me and call him at the Head Office. When she recognized the look of puzzlement on my face, she told me quietly not to tell anyone what I was doing.

When my manager answered the phone, he got right to the point: He asked me if I had any idea what Karl’s position size was at the moment. Karl sat across from me but the desk was noisy enough that unless you made an effort to ask someone what they were doing in the market, it wasn’t particularly easy to know—especially if you were busy trading your own position. I told my manager that I honestly had no idea what Karl’s position was. Then he asked if Karl was having a good or bad day. Glancing out the window, I could see that Karl was hunched over the desk, smoking his fiftieth or sixtieth cigarette for the morning, with a phone stuck to his ear. This was how Karl looked throughout the trading day. Again, I told him I really didn’t know.

My manager took a deep long breath then, paused, and then told me that he had just gotten a call from one of Karl’s cash currency brokers. The broker told my manager that by his estimation, Karl was down several million dollars and was probably carrying a position that was well over ten times his intraday limit. At that point in my career, my intraday loss limit was $100,000 and I assumed Karl’s limit was similar in size. My intraday position limit was US$20 million dollars and again, I assumed Karl had a similar position limit. If what this broker was telling the truth, Karl was well over his position and loss limits. "

Although office politics must exixt in all dealing rooms. It becomes insubordinative when another dealer reports to his boss on the situation of another dealer's blotter's health, without detailed knowledge of the true state. Where are the Seniors?
And in all respects I take personal displeasure that this action is classified as sabotage with intent. Further the followup of the story, confirms this "stab in the back" plot.

I asked my manager what he wanted me to do about it. And when he answered, I wasn’t wild about the idea. He told me to walk out to the trading room, go over to where Karl was sitting smoking his cigarette and quietly tell Karl I had just gotten a call from home and needed to speak to him privately out in the hall. Then I was to do my best to find out what Karl’s real position was and what his current P&L was. And if he was in as deep a hole as the call from the broker had suggested, I was to find a way to get Karl to take a walk to clear his head and while Karl was out of the room, I was to call my manager back with what I had found out.

I hung up the phone and took my own deep breath and then slowly walked over to where Karl continued to hunch over the trading desk, chain smoking his cigarettes. As soon as Karl noticed I was standing along side him, he mumbled into the phone that he had to go and then gave me a weak smile and asked, ‘What’s up, Tim?’

Going along with my manager’s plan, I softly told Karl that I had just gotten a call from my home and I needed to ask his advice out in the hallway. Karl glanced at his quote screen, grabbed his packet of cigarettes and his lighter and said, ‘Sure, let’s go,’ and then he led the way out of the trading room into the hallway. Once the trading room door closed, he asked me if everything was alright at home. I paused for a second and then told him that I had just gotten a call from our manager and that he was concerned about the size of Karl’s position and the mounting losses."

And the back stabbing plot thickens.

I’ll give Karl credit: I feared he would become irrational and perhaps even get angry enough to become violent, since someone had obviously ‘ratted him out’. Instead, I watched as all the energy drained out of his body. He closed his eyes and murmured, ‘I can’t lose this much money. It’s too damned much money! I know it will come back. I just need the market to come back.’ His eyes opened then and he asked what I was going to do about his position. I told him the truth: Our manager hadn’t told me to do anything about his position. I didn’t mention he had told me to call him as soon as I knew how large the position was and how bad the loss was. When Karl heard this, he repeated, ‘Tim, I can’t lose this much money. It’s too damned much money! I know it will come back. I just need the market to come back.’

I felt bad for Karl. He was completely lost at this point. His sole focus was that the market was now trading at irrational levels and that if he was just patient, the market would return to rational levels and everything would be alright. He’d completely forgotten that his position greatly exceeded his limits and that his trading loss dwarfed what he was allowed to lose in several weeks, let alone a single day. How was I going to help him? What could I do to help my manager and the bank I traded for?

While Karl leaned back against the wall, an idea came to me: I told Karl to take a walk downstairs to get some more cigarettes. I told him I’d watch his position for him. I told him to quit worrying—the markets always go where they’re supposed to go, right? He apparently took that to mean that I agreed with him, that the markets would return to his entry price if he only just waited it out. He said, ‘That’s a good idea. I’m almost out of cigarettes anyway. You watch my position and I’ll be back in a few minutes. It’ll come back. Thanks, Tim;’ then he patted me on the shoulder and walked down the hallway to the elevators.

Once I saw him get in an elevator, I went to Karl’s desk, checked his position size and did a quick calculation to get an idea of the size of his current loss. Then I went back into my manager’s office and called him back. I told him the news was worse than he had feared—The position was more than twice what the broker had told him and the loss was nearly three times as large. In less than two hours of trading, Karl had lost more than all the traders in our trading room normally make in three months of trading!


When Karl made the statement, "I can’t lose this much money"
he is clearly "dead in the waters" and therefore a bail out should already be in position to protect the bank's exposures, yesterday.
What stopped Karl from calling his TM to report the situation?
Was the TM truely ignorant of Karl's exposure?
Again,Where was the team of seniors?
Why were they not essembled to overlook the exposure?
Alternatively, the position could be quickly be transfered to HQ , where adhock facilities would be setup to monitor to rescue book?

And the plot thickens.

Now my manager gave me explicit directions: Go to Karl’s desk and close out his position. When Karl got back from buying cigarettes, I was to ask him to come into our manager’s office and call him at the Home Office. And while he was in the office talking with our manager, I was to double check that I had completely liquidated his positions and then check out all his trades with his brokers. Once that was done, I was to call each of them and tell them they were not to accept any further trades from Karl until they heard personally from my manager.

When Karl got back from buying cigarettes, he immediately asked me if the market had ‘come back to its senses’. I told him that the position was doing better now and then told him our manager wanted him to call him from his office. Karl didn’t flinch. He asked me to watch his position while he made the call and right before he entered the office to make the call, he said, ‘I’ll bet it comes all the way back before I get off the phone, Tim. Give me a shout if I get in the black while I’m on the phone in here, huh?

Why would a TM instruct a junior trader to neutralise the exposure?
Why would a TM neutralise the danger by boker price. exposing himself to broker to inform the world of the pridicament of the room?
Why, Isn't HQ trading?

To this day, I don’t know what my manager told Karl over the phone that day. He spent about 30 minutes in that office, then walked over to his trading desk, put his suit coat on, thanked me for watching his position and then walked out of the trading room. Then to my utter surprise, he walked back into the trading room a few moments later and opened the black binder and filled it out. Then he left for the day.

When I was done trading for the day, I, too, went over to fill out the black binder. I didn’t have an overnight position, so I put zero down in that column. I’d made about $30,000 that day trading, so I wrote that down in the correct column. And then out of curiosity, I read what Karl had written: He put down that he had lost $90,000 for the day [which was a fraction of what he had actually lost but that amount was within his allowable loss limit for any trading day] and he put down that he was carrying no overnight position. Our manager had apparently told him that someone had closed out his position. I shook my head in puzzlement, wondering why Karl would write down such a small loss in the black binder. Why write anything if you weren’t willing to write the truth, I wondered to myself.

I got a bigger shock the next day: Karl came in the next morning with a newspaper under his arm and a fresh carton of cigarettes in his hand. He went over to his trading desk as if nothing had happened, sat down, lit a cigarette and began reading the newspaper. He spent the morning reading his newspaper, smoking and making a few leisurely phone calls. Just after noon, he got up, walked over to my side of the desk and told me he was heading out a bit early. Then he went to the black binder and filled it out before leaving.

I had traded that day and it had been a fairly quiet day. I’d made about $20,000, so when I was done for the day, I went to the black binder and opened it and began filling it out. After I filled in my numbers, I glanced quickly at Karl’s: He hadn’t written a thing down under today’s date. Instead, he had erased yesterday’s loss number and changed it from $90,000 to $122,000. It didn’t make sense to me, but none of it made sense to me. Why had he come in today and why would he change his P&L number from yesterday?

My manager was out the entire week and each day for the rest of the week, Karl came in on time, sat and read his newspaper and when he decided to leave for the day, he went to the black binder and revised the first day’s loss to a more negative number. And then he left for the day. By the end of the week, he had revised that number to a loss of just over $300,000. That was still a fraction of the actual loss. It was as if he could not stand to write the real loss down, could not stand to admit that he had lost the money.

What happened to Karl? He didn’t get fired, actually. He was transferred the next week to the Head Office, where they could ‘watch over him more closely.’ He did leave the bank after the end of the year to take a job as an energy trader, so perhaps he had a term contract that ran out at the end of the year.

From the run of events presented, i can only conclude that Karl was managing the TMs position in his absence. The TM had already made it clear that limits violation is cause for walking cert, so there is no possibility that he could shield Karl on the violation, unless.
further, I can only see a TM leaving a hugh exposure for a junior to manage.
Now what does that tell me?

In all I am thankful to the author for the story.
For traders, I advise to be aware of the risk capacity benchmarked to past personal performance. Taking on market risk in excess of the "ability" to stomach it, can put the mind in a very dark place. It is difficult to set mindset tuned correct unless the "ability" has been properly educated and by participation in the market under fire. Simulation can help set the stage, but HANDS ON experience is necessary to verify that the simulation is realistic.

Although this story is a perspective to what can happen. Make no mistake that this is happening in markets daily, mostly to new traders. Why do you think the attrition rate for traders in general is so high.

So, although I do question the accuracy of the story, there is a moral behind it that I cannot dispute. And that to be profitable as a trader, YOU, and your training and applitute does take a paramount seat in your ability to excel.

I will get to the other two stories , when able.

Trade carefully.
Hi Leighsww, hope your trading is great.
Whip Babefx , if you must, but leave no scars, please.LOL

regards
  • #1,669
  • Edited 10:06am Mar 10, 2008 9:54am | Edited 10:06am
Quoting auxesis
Leighsww,

I have read this thread, and I use position averaging in my trading, although I view the battleground or the concept of rescuing differently than what has been discussed. But I would warn anyone of taking the attitude that the market cannot throw you a curve ball that you can not pound out of the park.

Of the three stories, the first one Karl, troubles me most. He was a veteran trader the other two were relativity new. Yes we are lacking many of the facts as to what actually happened, but I’d guess that Karl traded day in day out making money and comfortable in his technique and strategy until one day he found himself on the wrong side of the market and it continued to run against him. At first it seemed manageable, then a heavy loss, and suddenly the realization that the loss was outside his limits and then devastating job ending, life changing losses. At this time he was paralyzed in thought, the only light visible at the end of the tunnel and the only way out of his predicament was to hold as the market would eventually right itself.

This is the problem that I see with the approach that one will never take a loss unless your cash reserves are limitless.

Hence Karl, he was a successful trader, then one day the market threw him that curve ball and he was unable to recover. Given enough time the market will eventually throw us that curve ball, where the market will not quickly give us a correction to load up and make it back to Breakeven. To what level do we keep adding exponentially? At what percentage of our account to we put at risk 20, 30, 40% What happens when we hit that level and the market keeps dropping, but we know that it will turn around on the next level so we add one more round………………………………

I’m not trying to take away from this thread, there are many great ideas shared here. it just seems to me that the mindset that seems to be developing is one that has no fear of the markets, and in my humble opinion it is a dangerous one.

Regards,

@auxesis

Thank you for your highlighting,of the dangers, and the sharing of your experience.
Please try not to mistaken , fear of market, from the respect that a trader must accord the market.
I have seen and managed most curve balls that the market has thrown my way, inmy lifetime. Make no mistake that it can get hairy, at times.
Therefore it behoves the traders to be nimble and manage them best they can always. But in essence, there is less to fear from market gyration than from trader ignorance or egor.

I hope that a true understanding of the methdology here will be of value to your continuing market education.

All teh Best,
regards.
  • #1,670
  • Mar 10, 2008 10:10am Mar 10, 2008 10:10am
fti i am intersted if you can explain and tell more facts about 3 kingdoms (if there are any) and what's your oppinion about ECN level 2?

regrads
  • #1,671
  • Edited 10:51am Mar 10, 2008 10:31am | Edited 10:51am
Quoting mijamoto
fti i am intersted if you can explain and tell more facts about 3 kingdoms (if there are any) and what's your oppinion about ECN level 2?

regrads
Hi mijamoto,

In essence is a danceing with 3 markets simulteneously. (refer to my chart posting). you will be looking at 9 charts simulteneously.
ie cable& Eur( the colonial masters), USD (the WW2 victor) with the rest of the lump (the free third world trading partners).
This could be changing a little as the "pegged" countries are coming on stream.
To be able to dance this , you must master the ability to dance single girl first.
Its use is very useful to time the other girls. But if you have problem dancing one girl, then dancing 3 can be....
Moreover your book have to be quite large to do it.
Its sort of trading, with arbitrage as the foundation for the trade.ie crosses
When tearing occurs , its a handful to manage.
When in sync, it directs the trend in absolute.

I cannot advise about ECN2 as this is retail broking and I am here to learn about them myself (as I am from spot interbank tier1). even ECN as a viable trade vehicle is still being investigated.
I would be happy if others here , can direct to links in FF for indept understanding of this new trading vehicle (ECNs). I have a believe that this is not even teir 3 interbank. Thanks for asking anyways.

regards

PS: another thingy which I would like to stress again, is that just reading and flowing along the thread to rush here doesn't do justice in the study , as I am already going too fast.
Beaware that at evey stage of the study, there will be a vacuum of infomation, of which youmust pause , think and find the answers to the traning. If you move on without the thinking and using to discover the info for yourself. Then you accumulate that lack and then acutually gain nothing from the reading.
I believe many here that have gone thru the process will be happy to help you along with the helping ofthe answers to the questions that you wuoldn't know to ask about. So slow down and move at your own pace, as most of that need be taught is already given, and I am just trying to revisit that which may have been missed.
  • #1,672
  • Mar 10, 2008 10:48am Mar 10, 2008 10:48am
THX for your explaniation. How do you find today's retracment in major 3. I see it as a killing ducks and a new opportunity for going long

regrads and enjoy your time
  • #1,673
  • Edited 11:25am Mar 10, 2008 11:09am | Edited 11:25am
Quoting mijamoto
THX for your explaniation. How do you find today's retracment in major 3. I see it as a killing ducks and a new opportunity for going long

regrads and enjoy your time
In all essence, the feds interest rate policy have "showed hand" of the likely USD devaluation for the long run. Whats important is how it would pane out. In this markets, the whole world knows what to do, so the ability to stay on track becomes extremely difficult, as the volatility would increase on both the bull and bear side of the USD. Positioning is of no real consiquense to profits, as it would be difficult to sit on large exposures.

The most prudent trading would be to dance the volatility with smaller exposures and when positions snowballs on tight range to defuse that snowballing. Allowing a slow build up of the USD selling, allowing for this only when the USD selling can be protected with foreign capital that you capture from the markets as you babysit it. Do not be suprised that buying USD may prove the alterbnatively better short trade exposure while the USD selling be slowly built up. For more advance traders , the use of OTC USD options , may prove to be a better longer term strategy, while the short is traded. This is provided that you have the facalty to calulate the volatility money that is factored into the option cost. This is so that you do not pay too much premium for the volatility money. As the option is a wasting asset , toomuch premuim for volatility , will erode whatever gains you can get from the price gyration.
The pros would be writing the options, whenthe volatility money is high and manage the intraday gyrations,trying to get free time decay as well. but if you are not pro nor have absolute market access, do not go there.


regards
  • #1,674
  • Mar 10, 2008 12:37pm Mar 10, 2008 12:37pm
This thread is getting crazy complicated! There are simpler ways, and trading can be much more relaxed than this!
The framework is there; we just have to work on our frame of mind.
  • #1,675
  • Mar 10, 2008 12:48pm Mar 10, 2008 12:48pm
Quoting niceguy777
This thread is getting crazy complicated! There are simpler ways, and trading can be much more relaxed than this!
Different strokes, for different folks.
Carpe Divitiae
  • #1,676
  • Mar 10, 2008 5:07pm Mar 10, 2008 5:07pm
Quoting fti
Hi ALL,
watch it, the oil prices has broke ceiling again. $108

regards
You are totally correct. I am investing ONLY on gold and oil at this time! The big question is how high will gold will go up as long as we do not have an economical depression!....we already know that oil will keep going...this was the mess that brought me to look into currency trade. First I considered currency as a hedge then I began to love the currency trading..God help us.
Empty as water and soft as a facing wind mountain
  • #1,677
  • Mar 11, 2008 12:38pm Mar 11, 2008 12:38pm
Quoting fti
Wrong.
Law of motion.
Law of vibrations.

20 mins is his average hold.
It is average not fixed.

Change can only come about, when change happens with effects of law of motion.
Remember, Sun Zi Bi Fa?
reread water motion.

The legend mastered the pyrimids mathematics, ie Vincci proportions ie fibo ie WW table.

google & read

"Legend Interviewed by W y c k o f f in 1909......
"Water seeks its level," continued Mr. ...
http://www.tradingfives.com/gann/wd-...paper-1922.htm

regards
Hi, fti! I'm still not clear about how to use the law of motion and a law of vibrations in trading. I'm sorry if the question is so obvious.
Regards
Alex
  • #1,678
  • Edited 5:14pm Mar 11, 2008 1:23pm | Edited 5:14pm
Quoting alexfot
Hi, fti! I'm still not clear about how to use the law of motion and a law of vibrations in trading. I'm sorry if the question is so obvious.
Regards
Alex
Hi Alex

Understand the general influence of these laws will help your timing.

read these and see if you can understand, indepth understanding is not required.
Understanding of its influence is the foundation.

http://csep10.phys.utk.edu/astr161/l...wton3laws.html

http://www.ajna.com/articles/everything_in_motion.php

Also try to understand what "gravitation to the mean" means.
regards

PS: If you want to go indepth Law of vibrations, read the enclosed pdf
  • #1,679
  • Mar 11, 2008 1:26pm Mar 11, 2008 1:26pm
Quoting fsiltd
Different strokes, for different folks.
I completely agree, but I'm not into masochism!

The framework is there; we just have to work on our frame of mind.
  • #1,680
  • Mar 11, 2008 1:55pm Mar 11, 2008 1:55pm
fti , I've been consumed with personal issues and I'm back reading what I missed.
thankyou for being the light in the way we can go, I don't believe we could pay for an education like this, thanks for your direction, understanding and hope that you give.
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